The state’s handicraft industry is clearly feeling the effects of the US and European economies’ recession, increased inflation, and rising interest rate cycles. Handicraft producers have postponed development plans, scaled back operations, and turned to cost reduction in response to the decline in exports.
Along with exporters of handicrafts, the western world’s economic problems are also having an effect on those of the garment and carpet industries. Representatives from the various industries stated that they anticipate the downturn to last through 2023 as well, and that exporters are implementing survival plans in the interim.
Exports Promotion Council for Handicrafts vice-chairman Dileep Baid warned that if the downward trend continues, businesses will be put under stress. Since major consumers in the US and Europe have either cancelled orders or reduced the extent of offtake, exporters have enormous inventories.
The Christmas sales data will be crucial to pay attention to, according to Baid. Buyers will stop placing purchases if sales are poor and are unlikely to fulfil earlier orders completely.
In assessing the scenario that has been escalating since April of this year, Baid noted that the US government provided financial incentives to its citizens during the Covid pandemic. As a result, demand for handmade goods grew. Large purchases were placed by buyers to derisk the container shortage situation that was prevalent at the time as well as to satisfy the rising demand.
But today, he claimed, there is record-breaking inflation in the US and in Europe, and interest rates been hiked by the central banks. “The buyers were not anticipating a sharp decline in demand. They were overstocked by more than 42%. They began short-lifting or cancelling orders as a result starting in April,” according to Baid.
Baid said handicrafts makers in the state have put on hold all their expansion plans and reduced the operations. “The priority now is to survive and keeping costs under control is what many are doing.”
The occupations are also being affected. Employees are not expected to come in for work every day. Some employers are asking their staff to work three to four days a week. Those who formerly operated three units now only do so.
Though not as severe, the decline in garment exports is raising concern. The increase in fabric costs over the last two years has worsened the export decline.
The Association of Garment Exporters Sitapura’s (AGES) patron, Dalpat Lodha, stated: “Exports to markets like the US and Europe have decreased. The cost of fabrics is rising quickly and steadily, adding fuel to the flames. The Western world’s economies are in poor health. All nations’ exports have suffered.”
But according to Lodha, “if the government gets involved and the price of cloth drops, it will help the garment industry compete better with nations like Bangladesh and help us overcome the slowdown.” He predicted that some China-focused buyers would go to India if the Covid scenario in China persisted over a longer period of time.
The carpet business, which has so far weathered the storms, has begun to falter in the face of the fresh challenges. With significant job losses, the hand-knotted industry is feeling the effects of the slump most severely.